INDIANAPOLIS -- A standoff is looming at the Indiana Statehouse as lawmakers continue to debate several key bills prior to Sunday's adjournment deadline.

Democrats want to pass a bill giving schools more flexibility to spend from their reserve accounts, which Republicans have agreed on, 6News' Norman Cox reported.

But Republicans insist that these and other key bills be held up until an agreement is reached on a bill rolling back a tax increase on business to pay for unemployment benefits.

Republicans said the scheduled business tax increase is a job killer, and they won't proceed with other bills, including the education funding measure, until there's agreement on the entire package.

But Democrats are calling for passage of the education bill while talks continue on the tax measure.

"Let's pass that conference committee report in the House and in the Senate and get it to the governor, so we can help the kids of Indiana," said Rep. Trent Van Haaften, D-Mt. Vernon.

Republicans said they have made compromises on the unemployment tax bill, but Democrats keep holding out a ban on reclassifying workers as contractors so they can't get unemployment.

"It's a great compromise, and the speaker's clearly holding out for a single issue on a union classification issue," said Rep. Brian Bosma, R-Minority Leader. "It just isn't the right way to leverage those key issues ... jobs and funding for local schools for this single labor issue."

At around mid-afternoon on Wednesday, Speaker Pat Bauer slipped away from the House rostrum and went downstairs for a one-on-one session with Gov. Mitch Daniels.

When he emerged from the meeting he described as "mostly friendly," Bauer said the governor had agreed with him that all of the remaining bills should stand on their own and not be packaged.

"They stand on their own merits," said Bauer, D-South Bend. "If you're going to help education, help education. Don't keep it a hostage to another bill."

But when Republicans emerged from a later meeting with Daniels, they said that isn't the case at all.

"No, the governor thinks that we should keep negotiating," said Sen. David Long, R-President Pro Tem. "He understands the process. It's usually Speaker Bauer who's insisting that several things go together in order to get to a deal."

Republicans said they are concerned that if they give in on the education bill Bauer wants and pass that through both chambers, Bauer will adjourn the House and go home without passing the unemployment bill.